China’s trade surplus with US hits record high despite Donald Trump’s biting tariffs

United States President Donald Trump’s much-touted hefty tariffs on Chinese imports are yet to have a negative effect as the Communist nation’s trade surplus with America ballooned to a record high of USD 34.1 billion in September, latest official data showed on Friday.

Trump has been steadily hiking tariffs on Chinese exports to the US since June demanding Beijing to bring down the trade deficit amounting to USD 375 billion. The US escalated the trade war in September by imposing 10 per cent tariffs on USD 200 billion worth of Chinese goods being imported.

Trump threatened to impose tariffs on another USD 267 billion worth of products virtually covering almost all Chinese exports to the US totalling about USD 522.9 billion However, as the new US tariffs came into effect only on September 24, their impact is unlikely to be seen until later in the year or early in 2019, analysts said.

Data released by Chinese customs on Friday showed a 10 per cent increase from the USD 31.05 billion surplus booked for August to US, indicating that Trump’s tariffs were yet to have the desired effect of narrowing the trade gap between the two countries, the Hong-Kong based South China Morning Post reported.

The continued demand for Chinese goods in US despite tariff escalation made the ruling Communist Party of China’s mouthpiece the People’s Daily taunt Trump in its editorial on Friday, saying that if the US wanted to narrow the trade gap it could sell four aircraft carriers to China.

China’s exports in general went up 6.5 per cent year on year to 11.86 trillion yuan (about USD 1.72 trillion) in the first three quarters of 2018, surprising economists and analysts. The trade surplus was narrowed by 28.3 per cent to 1.44 trillion yuan in the first three quarters, state-run Xinhua news agency quoted the customs data as saying.

Export of electric-mechanical products increased by 7.8 per cent to 6.91 trillion yuan, taking up 58.3 per cent of China’s total export value, Li Kuiwen, the General Administration of Customs (GAC), spokesperson told the media. China has taken measures to readjust its export structure, with exports of automobiles and machine tools expanding 16.3 per cent and 18.7 per cent respectively.

The country has made great achievement in the green development of foreign trade, reducing the exports of energy-intensive, high-polluting and resource-intensive products by 7.6 per cent, Li said. Commenting on China’s official data, Larry Hu, chief China economist from Macquarie Capital, said the figures went against the prevailing sentiment.

“The September trade data show that despite the fears, the trade war has yet to have a negative impact,” he told the Post.

“With global growth likely to cool further in the coming quarters and US tariffs set to become more punishing, the recent resilience of exports is unlikely to be sustained,” Julian Evans-Pritchard, a senior China economist at research firm Capital Economics, wrote in a note.

“Meanwhile, with policy easing unlikely to put a floor beneath domestic economic activity until the middle of next year, import growth is set to slow further,” the Post quoted him as saying.